Bridgewater man, co-defendant charged in connection with life insurance scams to unions

BRIDGEWATER – A federal grand jury in Newark on Monday returned an indictment against Stephen Locrotondo, 50, of Bridgewater, and Edward Dombrowski, 44, of Acworth, Georgia, and formerly of Berkeley Heights, accusing them of creating and marketing fraudulent life insurance policies to unions in New Jersey and one municipality in the state, U.S. Attorney Paul J. Fishman announced in a press release.

Dombrowski was arrested December 9 at his Georgia home by Special Agents of the U.S. Department of Labor, Office of Inspector General and is expected to appear before a U.S. Magistrate Judge in Georgia for an initial appearance.

He and Locrotondo will have to appear in federal court in New Jersey on a date to be determined for arraignment on the Indictment. Locrotondo was not arrested and will be allowed to self-surrender for his court appearance in New Jersey.

The life insurance policies allegedly marketed by Dombrowski and Locrotondo required no contribution from the union members/union or municipal employees/city, according to the defendants and as described in the Indictment.

Instead, the policies would be funded by a third-party financing company that would recoup its investment at the time of the employee’s death by being made a beneficiary of the policy in addition to the beneficiary designated by the employee and the union/municipality.

So, according to Dombrowski’s and Locrotondo’s alleged scheme, at the time of the employee’s death, the death benefit would be split three ways: a portion to the employee’s beneficiary; a portion to the union/municipality; and a portion to the third-party financing company.

Although no life insurance policies were ever bound, Dombrowski and Locrotondo represented to the various unions and municipality that policies were in fact bound and in place, according to the indictment. It was only when employees died, and no death benefits were paid, that the unions and municipality discovered the truth – that there were no life insurance

(The Indictment does not identify the victim municipality or victim unions.)

Dombrowski and Locrotondo allegedly made similar false representations to the third-party financing company that, based on their representations and forged documents sent through interstate wires, paid $15 million to an account controlled by Dombrowski to fund a group life insurance policy for the New Jersey municipality. Rather than paying the monies to the insurance company, however, Dombrowski diverted nearly $2 million of the funds for his own use, purchasing real estate, stock, and buying two luxury automobiles, according to the Indictment.

The entire indictment and a press release are available at justice.gov.